Progress in Reforming China's Banks

At a time when the worst global financial crisis since the 1929 Great Depression threatens the very survival of many global financial giants, the relatively better financial performance of Chinese banks stands out. This is commendable considering that these banks were “technically insolvent” not too long ago. This paper reviews China’s banking reform strategy and its implementation and analyzes the financial performance of the four largest listed state commercial banks for the year 2007. The paper shows that banking reform has helped the banks boost profitability. However, the unfolding global financial crisis means that the banks are navigating a much more difficult economic terrain than hitherto. They need to manage risks while seizing the opportunities provided by an economy under restructuring, as well as sustaining the momentum of banking reform.